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Nonprofit News Groups Considering a Merger

In early 2009, San Franciscans faced the very real prospect that theirs could be the first major American city without a daily newspaper. The city’s only remaining broadsheet, the Hearst-owned San Francisco Chronicle, was in financial trouble and was slashing its reporting staff. Rumors spread that Hearst was considering letting the 145-year-old newspaper die.

Warren Hellman, a San Francisco investor and philanthropist, told friends he was alarmed by the potential loss of quality news coverage in the Bay Area, and he commissioned McKinsey & Company to evaluate a purchase of The Chronicle. He rejected that plan and decided instead to create a new experiment in nonprofit civic journalism. The Bay Citizen was launched in 2010 with grand ambitions, $5 million in seed money, and a performance by Mr. Hellman’s bluegrass band, The Wronglers, with Mr. Hellman twanging his banjo.

Then Mr. Hellman died unexpectedly, on Dec. 18, at age 77, of complications arising from treatments for leukemia. Now, The Bay Citizen is considering a potential merger, according to people involved in the discussions, a move that could see the publication absorbed by an older but similar nonprofit news organization in Berkeley, and raising questions about whether the founding patron’s vision for a revitalization of Bay Area news reporting can survive him.

The unexpected death of Mr. Hellman left The Bay Citizen without its founder and benefactor. In September, the news organization’s founding editor-in-chief, Jonathan Weber, resigned abruptly. In October, the founding chief executive, Lisa Frazier, announced that she would resign in early 2012 for health reasons. Last week, the interim editor-in-chief, Steve Fainaru, a former Pulitzer prize-winning investigative reporter for The Washington Post, announced that he was resigning to pursue a book project.

In the weeks before Mr. Hellman’s death, sources say, he began discussions with a local newspaperman, Phil Bronstein, then a vice president at Hearst Corporation, to take over as chief executive of The Bay Citizen when Ms. Frazier stepped down. Her last day on the job is Monday. She declined to comment for this article.

Mr. Bronstein, 61, who was editor of The San Francisco Chronicle from 2003 until 2008 (previously he served as the executive editor), is president of the board of the Berkeley-based Center for Investigative Reporting, C.I.R., another nonprofit journalism group that was founded in 1977. As a board member, Mr. Bronstein was involved in the creation of California Watch, a project of C.I.R., which assembled the largest team of investigative reporters in California. California Watch, which has an editorial staff of 27, was formed in 2009 and distributes what it calls high-impact journalism to more than 80 different publications.

Mr. Bronstein, according to people familiar with the board’s deliberation, said he would accept the job as Bay Citizen C.E.O. only if it were merged with C.I.R. and California Watch. In December, shortly after Mr. Hellman’s death, some board members and Bay Citizen contract partners — including The New York Times, which carries Bay Citizen reporting on Fridays and Sundays in its Bay Area editions — began hearing about the proposed Bay Citizen-C.I.R. merger.

Reached Thursday, Mr. Bronstein said he and Mr. Hellman had met periodically for years to discuss journalism, including features that Mr. Hellman suggested for The Chronicle, like “Rascal of the Week, Crook of the Week, hilarious stuff,” Mr. Bronstein said. He said that before founding The Bay Citizen, Mr. Hellman was considering making a donation to C.I.R. “at a large level,” and that after The Bay Citizen was started, talks eventually involved a closer working relationship between The Bay Citizen and C.I.R.

People involved with the discussions stressed this week that no merger agreement has been reached, and that the legal and financial logistics of combining two California nonprofit organizations, both of them regulated under section 501(c)3 of the Internal Revenue Service code, are daunting. Any merger agreement would have to be approved by the state attorney general, Kamala Harris, who oversees mergers of nonprofit corporations.

“The attorney general could step in and apply the brakes if she finds organizations proposing to merge where the missions and purposes of the two don’t match up,” said Gene Takagi, a specialist in the law of nonprofits and managing attorney at the NEO Law Group, based in San Francisco.

“If the opera and the Society for the Prevention of Cruelty to Animals propose a merger, that’s going to be a problem,” he said.

In a presentation to the Bay Citizen’s board last week, Mr. Bronstein, the leading candidate to be the combined organization’s chief executive, presented a vision of the combined news groups that would create “an unprecedented level of accountability reporting for the Bay Area” and create “the largest investigative reporting team in the region.”

However, in his presentation, Mr. Bronstein also suggested “economies of at least $1 million in operational expenses and $900,000 in duplicative personnel.” He outlined plans for the combined organizations to focus on “entrepreneurial journalism,” raising the possibility of turning the technology of the news group into a profit center.

Conspicuously absent from his presentation was the Bay Citizen’s contractual agreement to provide The New York Times with Bay Area news each week. Mr. Bronstein said the agreement could possibly conflict with partnerships that C.I.R. has with dozens of other print partners.

What the possible merger means for The Bay Citizen, C.I.R. and California Watch, three of California’s most ambitious public-interest reporting ventures, is a topic of intense speculation in their respective newsrooms.

“Journalists have been left out of the process,” said Aaron Glantz, a Bay Citizen staff reporter and chairman of the newsroom’s Newspaper Guild unit. “Neither the organization’s board of directors nor the outgoing C.E.O. have ever consulted with staff on the possible merger.”

Mr. Fainaru attended several board meetings where the merger was discussed, but declined to talk about specifics. As for his departure, he said the opportunity to work on a book with his brother, the investigative journalist Mark Fainaru-Wada, “has always been a dream of ours.”

With the board unable to define its strategy, “I felt the decision was pretty much made for me,” Mr. Fainaru said. He told colleagues that he would also take an investigative journalism job with ESPN. His last day is Thursday.

“We are deeply concerned that in the absence of a C.E.O. and editor-in-chief, we do not have an advocate who will fight for what we have all worked so hard to build here at The Bay Citizen,” Mr. Glantz said in an e-mail.

Robert Rosenthal, executive director of C.I.R., said: “I think there’s a tremendous possibility of bringing together two strong and unique organizations and blending their strengths and assets into something unique in nonprofit journalism. It could be transformational in terms of innovation around story delivery on all platforms and engaging its audiences in ways that were unthinkable even five years ago, as the technology and social media are evolving.”

Mr. Bronstein said that he shares the same vision as Mr. Rosenthal.

He added that discussions were fluid. “Things could jell quickly,” he said, “and they could also fall apart quickly.”

plewis@baycitizen.org

A version of this article appears in print on February 3, 2012, on page A21A of the National edition with the headline: Nonprofit News Groups Considering a Merger. Order Reprints|Today's Paper|Subscribe